The Fiduciary Duty Of Leading Investors In Chinese Internet Equity Crowdfunding Business

The traction investment system is a kind of equity raising mode,in Chinese private equity raise is very popular in practice,which is characterized as a lead investor who introduced sophisticated investors have rich investment experience,strong ability of risk identification and risk tolerance,review of project financing sure,later led the project lead for investment with investment,the formation of “herding”,and by the lead investor who responsible for the investment management.Although the lead investor who can rely on their professional knowledge and rich experience in investment screening the investment value of the project,to conduct a comprehensive investigation on the financing,and is responsible for the investment management,can effectively prevent the financing of enterprises,equity raised platform credit risk,small investors make up for lack of experience.But,for their own credit risk and how to prevent it? Based on the design of the concept of the traction investment system,this article holds that the responsibility should be given to the leaders in the form of legislation.The article is divided into the following four parts:Chapter I,The Development Status and Problems of Chinese Internet Equity Crowdfunding Business The chapter starts with the development of equity crowdfunding in Chinese practice and reviews the development of Chinese equity crowdfunding market from 2011 to 2017.Secondly,it analyzes Chinese legislation onequity crowdfunding,and believes that Chinese official approves the dichotomy model of the US “Jumpstart Our Business Startups Act” and regulates public equity crowdfunding and private equity crowdfunding separately.In terms of the positioning of equity crowdfunding,according to relevant policies and the attitude of the academic community,equity crowdfunding is included as a new version of “The Five New Board” capital market system in China.Then it introduced the mode of operation of equity crowdfunding and its transformation in our country's practice.Finally,the author analyzes the credit intermediary function and challenges of the leading investor in Chinese equity crowdfunding,and puts forward that the leading investors should be given to the fiduciary duty in the legislation to fulfill its credit intermediary function.Chapter II,Legal Principles for Giving Leading Investors Fiduciary Duty through Legislative Instruments The chapter discusses the rationality of giving leading investors the fiduciary duty by legislative means in two aspects.First of all,starting from the origin of the fiduciary duty,it is clear that the fiduciary duty is an obligation to serve the best interests of others in the fiduciary relationship,and then it is analyzed that the leading investors and the following investors constitute the fiduciary relationship.It must bear the fiduciary duty to the following investors and point out the similarities in status between the leading investors,trustee and company director.Then,from The Economics of Law,it analyzes the legitimacy of the legal obligation of the lead investors through legislation,which can provide supplementary mechanisms for the “incomplete contracts” between the leading investors and the following investors;On the one hand,it can improve the contracting efficiency of both parties and reduce contracting costs.Chapter III,The Functions of The Fiduciary Duty of The Leading Investors The chapter analyzes the three functions of fiduciary duty of the leading investors: 1.It helps to resolve the trust dilemma of the leading investors in equity crowdfunding.The credit intermediary function of the leading investors is faced with the challenge of its credit problem,giving him the fiduciary duty to supervise him to perform hisobligations faithfully,diligently and prudently.2.Help solve the problem of information asymmetry in equity crowdfunding.The problem of information asymmetry is manifested in the relationship between the investing and financing companies,the leading investors and the following investors,and by giving the leading investors the fiduciary duty,it can more effectively exert the functions of the credit intermediary,thus solving the problem of information asymmetry.3.The fiduciary duty helps to reduce the agency cost of following investors in equity crowdfunding.This section adopts the concept of agency cost as a theory of The Economics of Law.It believes that when a leading investors in equity investment on behalf of a limited partnership,he will try to maximize his own interests and increase the agency costs of the following investors.Therefore,it is necessary to give fiduciary duty to the leading investors to limit the behavior of the leading investors.Chapter IV,The Content of the Fiduciary Duty of the Leading Investors As Chinese official regulations do not have the fiduciary duty of the leading investors,the chapter starts with the principle of the fiduciary duty,and refers to the provisions of existing laws in other areas regarding the fiduciary duty,and explores the content of the fiduciary duty of the leading investors,discussed and analyzed the general standards and specific requirements of the fiduciary duty of the leading investors.